Government to announce new fiscal budget, projecting nearly HK$100 billion deficit as land sales and stamp duty revenues decline

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11th February 2024 – (Hong Kong) Hong Kong’s government is set to release its latest fiscal budget at the end of this month, with initial estimates suggesting a deficit of over HK$50 billion for the previous year. However, financial officials revealed today that due to a significant drop in revenue from land sales and stamp duty, the deficit may increase by nearly double to approximately HK$100 billion. In response to this financial challenge, officials emphasised the need for both revenue generation and cost-cutting measures. When discussing potential adjustments to public service fees, they underscored the importance of considering the public’s ability to bear the burden while narrowing the gap between pricing and costs. Remarkably, during the consultation period for the fiscal budget, the overwhelming majority of opinions received indicated that the government should refrain from further cash handouts.

During a radio interview, local financial officials acknowledged receiving numerous suggestions to reconsider previous measures. However, they emphasised that there is no need for significant relief measures as in the past. The government is determined to adopt a prudent approach in fiscal management, carefully considering both revenue generation and cost-cutting strategies. Regarding adjustments to public service fees, officials assured that the public’s ability to afford these fees would be taken into account, while also striving to minimize the disparity between pricing and costs.

Looking ahead, officials predict a more stable economic environment in the coming year compared to the previous year. They believe that a decline in interest rates, coupled with favourable economic conditions abroad, will drive demand and contribute to a more stable performance in Hong Kong’s asset market and exports. It’s worth noting that Hong Kong, as a highly open and small-scale economy, is significantly influenced by external factors. In particular, 70 to 80 percent of trading volume involves mainland Chinese companies. Therefore, during a period when the United States exerted considerable pressure on China, it had a certain impact on market sentiment.